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Routing: 302076017
Routing: 302076017
Routing: 302076017
Routing: 302076017

Traditional IRAs: All You Need to Know

No, IRA is not the name of a nice guy who will hold onto your money until you’re ready to retire. But you’re on the right track! Let’s take a look at Individual Retirement Plans (IRA), which is one of the most popular retirement tools.

What is a traditional IRA?

A traditional IRA is a tax-advantaged retirement savings account designed to help individuals build up funds for their post-employment years. Contributions made to a traditional IRA may be tax-deductible in the year they are made, providing an immediate reduction in taxable income. Earnings and gains are generally not taxed until the account holder begins taking distributions.

How do traditional IRAs work?

Here’s a quick rundown of how traditional IRAs work:

What are the benefits of traditional IRAs?

In addition to the advantages mentioned above, including tax-deductible contributions and tax-deferred growth, there are other benefits to traditional IRAs.

First, IRAs offer flexibility in investment choices. You can choose from investing your IRA funds in stocks, bonds, mutual funds and more. This flexibility allows you to tailor your investments based on your risk tolerance and financial goals.

Also, opening a traditional IRA offers the owner the potential for being in a lower tax bracket during retirement. This means that withdrawals made during retirement can be subject to lower taxes than the tax rate applied during their working years.

What do I need to consider before opening a traditional IRA?

There are several important factors to consider before opening an IRA:

Use this guide to learn how an IRA works, its advantages and what to consider before opening a traditional IRA to hold your retirement funds.

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